U.S. Chamber’s Donohue Sees 2012 Growth of Less Than 3%

By William McQuillen -
Jan 12, 2012

The U.S. economy will slow early
this year from the pace at the end of 2011, then accelerate and
finish with annual growth of less than 3 percent, U.S. Chamber
of Commerce President Thomas Donohue said as the nation’s
largest business group offered its forecast for 2012.

“America’s most pressing economic challenge is the lack of
sufficient growth to create jobs, expand incomes, reduce
government deficits, and fund essential programs,” Donohue said
today in Washington during his annual speech on the state of
U.S. business.

Growth in the gross domestic product will slow to about 2.5
percent in the first half of the year, then speed up to a rate
of about 3 percent, Donohue said. Economists surveyed by
Bloomberg project growth will slow in the first quarter to an
annual rate of 2 percent from 3.1 percent in the fourth quarter
of last year and will average 2.3 percent for all of 2012.

“If government starts removing the impediments that we
have long identified as stifling growth and jobs, then it will
be incumbent on business to start taking a few more risks and
making some new investments,” he said.

The energy industry, “on the cusp of an energy boom,” can
add hundreds of thousands of jobs in the coming years, Donohue
said. Oil and gas development may create 300,000 jobs in Ohio,
New York, Pennsylvania and West Virginia in the next few years,
he said. TransCanada Corp. (TRP)’s Keystone XL pipeline from Canada to
Texas can create 20,000 jobs immediately, and 250,000 over the
course of its production, Donohue said.

Environmental Tests Passed

“The project has passed every environmental test,” he
said of Keystone. “There is no legitimate reason to delay it.”

Legislation extending the U.S. payroll-tax cut that passed
Congress last year requires the State Department to issue a
permit by Feb. 21, too little time a full review, White House
spokesman Jay Carney said on Dec. 20. Environmental groups
oppose the 1,661-mile (2,672-kilometer) project. The Obama
administration in November delayed the pipeline decision until
2013, citing concerns of Nebraska residents about the route
across an aquifer.

“The Chamber is a pay-to-play operation, and it has been
taken over by big oil companies with the biggest pockets,”
Jeremy Symons, senior vice president of the National Wildlife
Federation, a conservation group that opposes the Keystone
pipeline, said on a conference call with reporters yesterday.

Donohue, who warned that 2012 should “not be a wasted
year” during the presidential election, said the top priority
for the U.S. should be creating jobs. The unemployment rate fell
to 8.5 percent in December from 9.4 percent a year earlier.

Boosting Trade

Increased trade could provide more opportunities for
growth, Donohue said. The proposed Trans-Pacific Partnership
trade agreement with eight other nations can be completed this
year, and free-trade accords are possible with Brazil, Egypt,
India and Indonesia, he said.

U.S. businesses also will benefit from Russia being granted
permanent normal trade relations after meeting conditions to
join the World Trade Organization.

Broadening visa programs and reducing the time required to
clear U.S. Customs to 2001 levels may lead to 1.3 million jobs
and $860 billion in economic benefits, he said.

The Chamber’s economic and tax policies were challenged
yesterday by the Washington-based U.S. Chamber Watch, which is
affiliated with a federation of five U.S. labor unions.

Leo Hindery, managing partner at the private equity
investment fund InterMedia Partners LP, said on a conference
call that the Chamber largely represents the interests of about
20 of the nation’s largest multinational corporations.

The tax policies advocated by the Chamber “will not incent
the creation of jobs,” Hindery said on the call, organized by
the group. “It will simply enrich these larger American
multinational corporations.”

He said that Europe “faces an unresolved financial crisis
and looming recession.”